The contributions of small and medium enterprises (SME’s) On Malaysian economic growth: A sectoral analysis

Abstract

Small and medium enterprises (SMEs) including microenterprises have played an important role in fostering growth, employment and income, and have been integral to Malaysia’s economic transformation process. The Malaysia government is targeting for SMEs to contribute at least 40% to the economic growth in 2016. It is crucial that the government must precisely know which sector in its economy contributes the most, which have the potential to generate greater future growth and which sectors are weak and need supports to survive in the competitive economy. Hence, this study examines the contribution of SMEs industry towards Malaysian economic growth. For this study we employ a range of statistical tools based on and trend analysis of the contribution of SMEs towards Gross Domestic Product. The sample data is SMEs by sectors for the period of 2005 – 2016. In this study we found that SMEs are important to the Malaysian economies which comprise 99.2% of total business establishments, where SMEs contributed 32% of Gross Domestic Product (GDP).